Tractor Loans Benefit Service Providers and Farmers

Tractor service providers in Nigeria face a number of

challenges in acquiring tractors to meet the extensive

Tractor at work on a field

need for mechanisation. Smallholder farmers are equally
challenged in accessing sparse existing tractor resources.
Now however, through partnerships facilitated by UK aid
funding, tractor hiring association members like
Suleiman Maigana are receiving tractor loans and
providing much needed tractor services to thousands of
smallholder farmers like Abdulrahimu Danyero and
Ubale Wakili in Nigeria.

Context of our Tractor Component A Service Provider’s Gain

Tractors are essential to farming wide areas of land and to Suleiman Maigana was one of 27 service providers given a
increased food production. Tractors reduce the time and loan by FCMB to purchase a tractor; the only way he could
human labour needed for tasks like ploughing, harrowing or have afforded a new tractor. Suleiman lives with his family
ridging, and are more cost effective than using manual of twenty four in Maigana, Kaduna state and has not always
labour. While the urgency to develop Nigeria’s agricultural been a tractor service provider. Starting out as a tobacco
sector has increased, tractor usage has remained low at an farmer in the 80s, Suleiman always wanted to own a tractor
estimated 6.6 tractors available for every 100 sq. km. This is but could not afford a new one. Years later he was able to
in contrast to 128.5 tractors / 100 sq.km in India and as high purchase a used model. However an old tractor can prove
as 4500 / 100 sq.km in Japan. A key factor which impedes problematic, and Suleiman still dreamt of owning a new
greater penetration of tractors in model.
FCMB reports that TOHFAN members have been 100%
Nigeria is their high cost of pur-
consistent with their monthly repayments. Encouraged by the In 2011, Alhaji Suleiman
chase. Smallholder farmers who are group’s performance, the bank has recently disbursed 67 heard about TOHFAN from
the majority of the country’s farm- additional tractor loans worth NGN 227.8million (£843,700) to
his tractor mechanic and
ers cannot afford to buy a tractor, members of the association.
joined the association to
and neither can members of associ-
help him access more opportunities for his tractor business.
ations who seek to offer tractor services to farmers. Loans
In 2014 when the Propcom Mai-karfi and FCMB partnership
are often hard for these groups to access as requirements are
offered TOHFAN members the chance to collect tractor
either too steep to meet, repayment terms too difficult to
loans at a moderate repayment rate, Suleiman jumped at
negotiate, or approval bureaucracies daunting to navigate.
the offer and worked to raise the required 20% equity
Background of the Tractor Initiative deposit. Months later Suleiman received a brand new
Mahindra tractor from Springfield Agro, financed by FCMB.
In 2013, the UK aid-funded Propcom Mai-karfi project
commenced working with financial institutions and tractor
vendors to develop a financing mechanism and guarantee
scheme which would encourage banks to give tractor loans
to service providers within associations. Propcom Mai-karfi
also partnered with the Tractor Owners and Hiring Facilities
Association of Nigeria (TOHFAN), an association with a “farm
mechanisation for food security” slogan. TOHFAN was estab-
lished in 2003 and has a membership of 410 in 12 states. In
May 2014, 27 members of TOHFAN were each given loans
worth NGN 3.4million (£12,500) for a tractor through our
partnership with a commercial bank - First City Monument
Bank (FCMB) and with a tractor vendor - Springfield Agro. Suleiman poses with his Mahindra tractor in the background
 Since receiving his new tractor 10 months ago, Suleiman The Smallholder Farmer’s Benefit
estimates that he has provided mechanisation services to
Abdulrahimu Danyero is one of 14,000 smallholder farmers
over 600 smallholder farmers in Kaduna, Niger, Nasarawa,
who have received tractor services in 8 states because of
and Kano states. Suleiman charges farmers an average of
FCMB’s tractor loans. Abdulrahimu cultivates
NGN7,000 (£26) / hectare for his services; Last season alone, TOHFAN
members provided tractor
rice on 0.4 hectares of land in his community
varying slightly by the cost of diesel. He
services to 14,000 smallholder of Dumaji in Kano state. Abdulrahimu
says that he makes about NGN400,000
farmers in 8 states using engaged the services of a tractor service
(£1,500) per month from his new tractor; FCMB’s tractors. provider to harrow his farmland at a cost of
which does not cost him a lot to maintain,
NGN4,000 (£16). If Abdulrahimu could not access tractor
and he has been able to consistently make the monthly
services, he would need to hire 20 people to manually
repayment to FCMB which varies, but is never more than
harrow his farm in one day at a total cost of about
NGN170,000 (£680).
NGN20,000 (£80). Using tractors have cut his harrowing
cost by over 80%, saving him NGN16,000 (£64) which he
can invest in other parts of his farming business like

Farmer oversees work on his farm

purchasing quality inputs.

In 2015, Abdulrahimu plans to double his farm size to near-

ly one hectare and to keep expanding in the future using
tractors to expedite land preparation. “If I were to use man-
ual labour on more land, it will take days to double harrow
my land, and I will have to provide meals and other services
to hired labourers on those days. A labourer once told me
that he could not come because he didn’t have firewood at
home. I had to give him firewood”. Abdulrahimu says that
Reflecting on his business growth, Suleiman says: “in recent
beyond the time
times, there hasn’t been any time that I have lacked money “Now that I use tractors, I harvest more
on the same size of land, and my family is and labour effec-
for shelter, food, or for paying for my children’s school fees.
better cared for. We (he and other tiveness of using
My family is happy with where we are and how we are able
farmers in his community) are now able to tractors, he is also
to provide these services to even our neighbours. There is a increase our farm sizes because the stress saving money
strong sense of ownership in the family, my four sons are and time spent on the farm has been
which he is
heavily involved in my daily operations, they drive and greatly reduced for us”.
investing in other
service the tractor”. Suleiman sees the huge mechanisation - Ubale Wakili
areas and using
demand still unmet, and plans to purchase another tractor - Farmer and beneficiary of
Suleiman’s tractor services to take care of his
when he pays off his FCMB loan in 20 months.
domestic needs.

Tracking tractors and measuring profit Impacting rural livelihoods

Propcom Mai-karfi introduced TOHFAN to the use of an The tractor initiative is increasing the incomes of service
electronic tracking system which members have installed providers, reducing production costs for farmers, and
on their tractors. TOHFAN Chairman Alhaji Danladi Garba creating income-generation opportunities for tractor
says that with the tractor trackers, members now know the operators. Tractors in Nigeria are typically operated by two
locations of their tractors at all times, can estimate profit people: one seasoned operator drives, and an apprentice
from hours worked and land size covered, can gauge when helps out with odd jobs like moving obstacles on the farm.
a tractor has put in 150 hours and is due to be serviced, and While tractors characteristically reduce the need for human
also alerts owners on labour in land preparation, Abdulrahimu and Ubale have
The tracker improves accountability
from hired operators. This has an electrical fault in the also said that with expanding their farm sizes they are hir-
increased owners’ revenue by over tractor. While Suleiman ing more hands for other tasks like planting, weeding, har-
₦400,000/tractor per season. “The does not actively vesting, threshing, winnowing, bagging, and transportation.
trackers are why we have no issue
monitor his tracker, he To contact us:
with repayment”- Alh. Danladi.
recognizes the benefits Call: +234 (0) 805 479 6992 OR Email: info@propcommaikarfi.org
of the technology and would use it if his tractor business Website: www.propcommaikarfi.org
Facebook: www.facebook.com/propcommaikarfi
was not being managed within the family. Twitter: www.twitter.com/Propcom2